GMS to Acquire WSB Titan, the Largest Wallboard Distributor in Canada

Expands GMS’s leadership position in North America through
combination of the largest U.S. and Canadian wallboard distributors

Provides entry and new growth opportunities into highly attractive,
fragmented Canadian market

Combines two experienced and well-respected management teams with
shared commitment to customer service and operational excellence

The combination increases GMS’s Adjusted earnings per share by
approximately 25% and Adjusted EBITDA margin by over 100 basis points
on a pro forma basis

Expect to realize at least $10 million in cost synergies within
first full year following the close of the transaction

Conference call scheduled for April 5, 2018 at 8:00 a.m., Eastern
Time

April 05, 2018 06:30 AM Eastern Daylight Time

TUCKER, Ga.--(BUSINESS WIRE)--GMS Inc. (NYSE:GMS), a leading North American distributor of wallboard
and suspended ceilings systems, announced today a definitive agreement
to acquire 100% of the equity interests of WSB Titan (“Titan”) for total
consideration of approximately $627 million (C$800 million).
Headquartered in Toronto, Titan is Canada’s largest gypsum specialty
dealer (“GSD”) serving the residential, commercial, and institutional
markets with key products including wallboard, insulation, lumber,
roofing, steel framing, and other complementary building products. Titan
was founded in 2009 through the partnership of Watson Building Supplies
and Shoemaker Drywall Supplies, two trusted wallboard distributors with
roots dating back to the 1970s, and expanded the platform in 2015
through the acquisition of Slegg Building Materials, a family-run
wallboard and building supplies distributor formed in 1947.

Mike Callahan, President and CEO of GMS, commented, “The acquisition of
Titan further extends our leadership position as the largest wallboard
distributor in North America with significant scale advantages and a
well-balanced portfolio built for growth. The combination also provides
us with a market leading position in Canada and the foundation to
support future opportunities in this highly fragmented market while
creating opportunities to share best practices across our operations. I
have been extremely impressed with the quality of Titan’s management
team, the excellence of their operations, and their steadfast commitment
to service quality, which has resulted in market leading margins and a
solid track record of organic and inorganic growth. With a strong
cultural fit and shared focus, we are confident this combination will be
beneficial to both companies.”

Doug Skrepnek, CEO of Titan, added, “Like GMS, we have built our
business through a differentiated service model that fosters loyalty and
long-term relationships with top-tier customers and suppliers. This
shared commitment, coupled with the opportunity to join forces with
another industry leader in North America, makes this combination
extremely compelling for Titan’s stakeholders. While we have individual
strengths that we plan to leverage across the combined platform, having
shared values and similar cultures makes this a natural combination. On
behalf of everyone at Titan, we are looking forward to joining the GMS
team.”

Strategic Rationale

GMS believes that the acquisition of Titan will result in several
strategic and financial benefits, including:

Expansion of Scale and Footprint in North America: Adding the
largest Canadian wallboard distributor to GMS’s existing U.S.
footprint creates a market-leading North American GSD platform with
over 240 locations across 42 U.S. states and five Canadian provinces.

Geographic Expansion into Attractive Market: The acquisition of
Titan provides an entry point into the highly attractive, fragmented
Canadian GSD market. As an attractive acquirer in Canada with a proven
track record of organic and inorganic growth, having completed five
transactions and opened four greenfields since 2009, the addition of
Titan is expected to allow GMS to participate in further M&A and
greenfield opportunities throughout the Canadian GSD market.

Well-Balanced Platform for Growth: The combination will
diversify GMS’s product offerings and create significant opportunities
for product expansion in both the United States and Canada while
enhancing the Company’s ability to serve its customers. In addition,
acquiring Titan positions GMS as a key North American distributor of
insulation, while further accelerating growth across the combined
company’s product portfolio.

Complementary Cultures & Commitment to Customer Service:
Titan serves as a value-added partner to a broad base of over 14,500
customers, including some of the largest wallboard interior finishing
installers in Canada. Titan’s experienced management team has earned
its reputation for operational excellence and service quality, which
underpin Titan’s strong culture and are shared by GMS.

Expected to be Immediately Accretive to Adjusted Earnings per Share
and Adjusted EBITDA Margin: Titan’s scale, market position,
operating platform and value-added services have driven market leading
Adjusted EBITDA margins of 14.7% for the twelve months ended January
31, 2018. We estimate that the combination would have increased GMS’s
Adjusted earnings per share by approximately 25% and Adjusted EBITDA
margin by over 100 basis points on a pro forma basis for the twelve
months ended January 31, 2018.

Meaningful Cost Synergies: GMS expects to capture cost
synergies of at least $10 million within the first full year following
the close of the transaction, driven largely by purchase synergies
associated with the combined company’s enhanced scale. These estimates
do not include any expected benefits associated with the sharing of
best practices or product expansion opportunities.

Management

Mike Callahan will continue to serve as President and CEO of the
combined company, which will remain headquartered in Tucker, Georgia.
Doug Skrepnek will become President of GMS Canada, reporting to Mr.
Callahan.

Transaction Details

Under the terms of the agreement, GMS will acquire 100% of the equity
interests of Titan for approximately $627 million (C$800 million) from
Titan’s current management and TorQuest Partners. For the twelve months
ended January 31, 2018, Titan recorded revenues of approximately $459
million and Adjusted EBITDA of approximately $68 million resulting in a
transaction multiple of less than 8.0x Adjusted EBITDA, including the
impact of estimated cost synergies.

GMS has secured fully-committed debt financing for the transaction and
per the terms of the agreement, existing Titan management, which is
committed to leading the combined company’s Canadian business going
forward, will roll over $35 million of their current ownership position
into GMS stock. GMS remains focused on maintaining a prudent capital
structure and a strong financial position with sufficient flexibility to
fund ongoing business operations and acquisitions. The transaction is
expected to close late in the second calendar quarter of 2018 and is
subject to the expiration or termination of the applicable waiting
periods under the Canadian Competition Act, as well as other customary
closing conditions.

GMS will host a conference call and webcast to discuss the acquisition
at 8:00 a.m., Eastern Time, on April 5, 2018. Investors who wish to
participate in the call should dial 800-289-0438 (domestic) or
323-794-2423 (international) at least 5 minutes prior to the start of
the call. The live webcast will be available on the Investors section of
the Company’s website at www.gms.com.
There will be a slide presentation of the results available on that
page of the website as well. Replays of the call will be available
through May 5, 2018 and can be accessed at 844-512-2921 (domestic) or
412-317-6671 (international) and entering the pass code 1121351.

About GMS Inc.

Founded in 1971, GMS operates a network of more than 210 distribution
centers across the United States. GMS’s extensive product offering of
wallboard, suspended ceilings systems, or ceilings, and complementary
interior construction products is designed to provide a comprehensive
one-stop-shop for our core customer, the interior contractor who
installs these products in commercial and residential buildings.

Use of Non-GAAP Financial Measures

GMS reports its financial results in accordance with GAAP. However, it
presents Adjusted earnings per share, Adjusted EBITDA and Adjusted
EBITDA margin, which are not recognized financial measures under GAAP.
GMS believes that Adjusted earnings per share, Adjusted EBITDA and
Adjusted EBITDA margin assist investors and analysts in comparing its
operating performance across reporting periods on a consistent basis by
excluding items that the Company does not believe are indicative of its
core operating performance. The Company’s management believes Adjusted
earnings per share, Adjusted EBITDA and Adjusted EBITDA margin are
helpful in highlighting trends in its operating results, while other
measures can differ significantly depending on long-term strategic
decisions regarding capital structure, the tax jurisdictions in which
the Company operates and capital investments. In addition, the Company
utilizes Adjusted EBITDA in certain calculations under its senior
secured asset based revolving credit facility and its senior secured
first lien term loan facility.

You are encouraged to evaluate each adjustment and the reasons GMS
considers it appropriate for supplemental analysis. In addition, in
evaluating Adjusted EBITDA, you should be aware that in the future, the
Company may incur expenses similar to the adjustments in the
presentation of Adjusted EBITDA. The Company’s presentation of Adjusted
EBITDA should not be construed as an inference that its future results
will be unaffected by unusual or non-recurring items. In addition,
Adjusted EBITDA may not be comparable to similarly titled measures used
by other companies in GMS’s industry or across different industries. The
financial information of Titan provided in this press release was
provided to the Company by Titan.

Forward-Looking Statements and Information:

This press release includes “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. You can
generally identify forward-looking statements by the Company’s use of
forward-looking terminology such as “anticipate,” “believe,” “continue,”
“could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,”
“potential,” “predict,” “seek,” or “should,” or the negative thereof or
other variations thereon or comparable terminology. In particular,
statements about the markets in which GMS or Titan operates, product
expansion opportunities, potential acquisitions or greenfield
opportunities, the combination of best practices, statements about their
expectations, beliefs, plans, strategies, objectives, prospects,
assumptions or future events or performance, statements related to
non-GAAP financial measures such as Adjusted earnings per share,
Adjusted EBITDA and Adjusted EBITDA margins, including accretion
thereto, and statements regarding expected cost synergies, the expected
transaction multiple, and the expected timing of the transaction
contained in this press release are forward-looking statements. The
Company has based these forward-looking statements on its current
expectations, assumptions, estimates and projections. While the Company
believes these expectations, assumptions, estimates and projections are
reasonable, such forward-looking statements are only predictions and
involve known and unknown risks and uncertainties, many of which are
beyond its control. Forward-looking statements involve risks and
uncertainties, including, but not limited to, economic, competitive,
governmental and technological factors outside of the Company’s control,
that may cause its business, strategy or actual results to differ
materially from the forward-looking statements. These risks and
uncertainties may include, among other things: changes in the prices,
supply, and/or demand for products which GMS or Titan distributes;
general economic and business conditions in the United States and
Canada; the activities of competitors; changes in significant operating
expenses; changes in the availability of capital and interest rates;
adverse weather patterns or conditions; acts of cyber intrusion;
variations in the performance of the financial markets, including the
credit markets; and other factors described in the “Risk Factors”
section in the Company’s Annual Report on Form 10-K for the fiscal year
ended April 30, 2017, and in its other periodic reports filed with the
SEC. In addition, numerous factors could cause actual results with
respect to the proposed transaction to differ materially from those in
the forward-looking statements, including without limitation, the
possibility that the expected synergies and cost savings and financial
impacts from the proposed transaction will not be realized, or will not
be realized within the expected time period; the risk that the GMS and
Titan businesses will not be integrated successfully; the ability to
obtain governmental approvals of the proposed transaction on the
proposed terms and schedule contemplated by the parties; disruption from
the proposed transaction making it more difficult to maintain business
and operational relationships and to accomplish other GMS objectives;
the risk of customer attrition; the possibility that the proposed
transaction does not close, including, but not limited to, failure to
satisfy the closing conditions; and the ability to obtain the debt
financing contemplated to fund the cash purchase price for the proposed
transaction and the terms of such financing. In addition, the statements
in this release are made as of April 5, 2018. The Company undertakes no
obligation to update any of the forward looking statements made herein,
whether as a result of new information, future events, changes in
expectation or otherwise. These forward-looking statements should not be
relied upon as representing the Company’s views as of any date
subsequent to April 5, 2018.